Roundup: S&P lowers EDMC's rating; Judge gives preliminary OK to Alpha settlement; more
S&P lowers EDMC's rating to junk on enrollment decline
Standard & Poor's cut the credit rating of Education Management Corp. further into junk status on Monday, citing concerns about declining enrollment at the Downtown-based operator of for-profit colleges. The ratings downgrade occurs a week after the company announced another round of layoffs in an effort to trim expenses as enrolment declines continue to hurt its profitability.
Standard & Poor's lowered Education Management's rating by one level to CCC+ from B- and said in a statement that it expects fewer students to sign up to take classes at the company's post-secondary schools, which include the Art Institutes. Education Management spokesman Chris Hardman said the company is making progress on cutting costs by between $100 million and $125 million by June 30, the end of its current fiscal year. The company also is “focused on enhancing access and affordability for all students ... with the goal of returning to positive enrollment growth,” Hardman said. Forty employees in Pittsburgh were laid off on Feb. 18 and several hundred were let go in October. Education Management has about 23,000 employees across the United States, including about 2,200 in Pittsburgh. Education Management has reported two straight years of losses. Enrollment dropped 9 percent last year to 120,920 students at its 110 schools in the United States and Canada. Regulators are probing the for-profit education industry, which has the highest student-loan default rates among educators, S&P said. Education Department is rewriting eligibility rules for federal student loans and grants, which make up about 80 percent of Education Management's funding.
Alpha settlement gets preliminary OK
A federal judge in West Virginia has given preliminary approval to Alpha Natural Resources Inc.'s proposed $265 million settlement with former Massey Energy investors who say they were deliberately misled about its safety record before the 2010 Upper Big Branch mine disaster, the company said Monday. The Bristol, Va., coal producer said U.S. District Judge Irene Berger gave preliminary approval last week and set a hearing for June to discuss whether the settlement is “fair, reasonable, and adequate.” The company said it continues to deny all allegations of wrongdoing or liability but is agreeing to settle to “eliminate the burden, expense, uncertainty, and distraction of further litigation,” according to the court filings. The Massachusetts Pension Reserves Investment Management Board, which oversees public pension investments in Massachusetts, was the lead plaintiff in a class-action lawsuit brought by multiple investors against Alpha Appalachia Holdings Inc., formerly known as Massey Energy Co. Its parent company, Alpha Natural Resources, bought Richmond-based Massey for $7.1 billion in 2011.
Several new phones coming,but all eyes on Samsung
Sony introduced a waterproof phone that can take ultra-high-definition video. Nokia introduced three Android smartphones aimed at emerging markets. And Lenovo announced one with an all-glass exterior. Yet the spotlight Monday was on Samsung, which announced a successor to its flagship Galaxy S4 smartphone. The Galaxy S5 will feature a heart-rate monitor, a fingerprint sensor for security and a sharper camera with faster auto focus. Samsung's glitzy announcement during the Mobile World Congress wireless show in Spain made it harder for other phone makers to get noticed. Samsung had several times the attendance of either Sony's or Nokia's event Monday.
Honda appoints 1st woman to board, promotes foreigner in diversity move
Honda appointed a woman to its board for the first time and gave a major promotion to a foreigner in signs the automaker wants to change perceptions of a hidebound corporate culture. Technology expert Hideko Kunii, 66, will join the board, and Issao Mizoguchi, a Brazilian of Japanese ancestry, who has worked with Honda's South American operations for nearly 30 years, has been appointed operating officer, Honda Motor Co. said on Monday. The appointments need shareholder approval at a meeting set for June. Companies have come under fire within Japan for not promoting anyone other than Japanese men.
Cigarette maker bans animal testing
The nation's third-biggest tobacco company said it's banning animal testing in light of discussions with an animal rights group. Lorillard Inc. confirmed the policy change to The Associated Press on Monday. The Greensboro, N.C.-based maker of Newport cigarettes said it won't conduct or commission animal research unless it's necessary to meet regulatory requirements. Lorillard said it hasn't done any animal testing in about five years.
Other business news
•The Bank of New York Mellon Corp. has nominated Jeffrey A. Goldstein for election to its board of directors. Goldstein, a former under secretary of the U.S. Treasury for domestic finance, is an executive at private equity firm Hellman & Friedman LLC. He also has served as chief financial officer of the World Bank. Shareholders will vote for Goldstein for a one-year term at the BNY Mellon's annual meeting on April 8.